Question

The HBR (2004) article entitled “Customer-Centered Brand Management,” argues that brand managers should “make (their) brands as narrow as possible.” Explain a) why this is a sensible general advice to today’s brand managers, and b) under what circumstances it may not be a good guideline to follow.

(Limit your discussion to 1 type-written page.)

Answer 1

ANSWER:

Most of the managers today agree with the notion that they should focus on growing the lifetime value of their customer relationships. Building loyalty and retention, cross-selling related goods and services, broadening offerings to fulfill more of customers need and wants all are the way of adding to overall customer equity. The problem is for all the managers buy into this long-term customer focus, most have not bought into its logical implications.

MAKE (THEIR) BRAND AS NARROW AS POSSIBLE  

Henry Ford May have sold the Model T to a broad cross-section of consumers, but today there are men's and women's formula of vitamin distinct television channel for Latinos, Africans-Americans, Women, Senior Citizen. As advances in technology and customer information make much segmentation easier, this trend is likely to become even more pronounced. And it should. If the customer is central, then the purpose of a brand should be satisfied as small as a customer segment as is economically feasible. Allowing for the fact that some breadth is desirable for its own sake, the tendency should be towards a brand that is increasingly narrow over time. A tighter focus can only enhance the clarity and value of the brand in customer's eyes.

THE VALUE OF A BRAND DEPENDS ON CUSTOMER

One of the most important things to understand about a brand is that its value is highly individualized. A customer might grow tired of a brand or more enamored, independent of how other customers are responding to it.

PUT YOUR BRAND IN THEIR PLACE

If one accepts that the goal of management is to grow customer equity, not brand value, and that brand value is only meaningful at a highly individual level, then one will likely manage the brands in a profoundly different way.

MAKE BRAND DECISIONS SUBSERVIENT TO DECISIONS ABOUT CUSTOMER RELATIONSHIPS

This means creating or strengthening the role of customer segment management and allocating resources to that function rather than to traditional brand manager. It may even make sense to go beyond segments and assign managers to specific customers if they are big and important enough. In the business-to-business world, this is known as managing key accounts, Companies like Ericsson and IBM assign account managers and give them broad authority in marketing to important customers.

IT SHOULD PLAN BRAND EXTENSION BASED ON CUSTOMER NEEDS, NOT ON COMPONENT SIMILARITIES

Many companies are guilty of the brand over-extension usually because they evaluate extension according to how similar the new product is to the old one. Instead, they should be thinking about whether two product's customer is similar. Clearly, it makes no sense to try to extend a brand to a dissimilar product with the dissimilar customer.

TAKE NO HEROIC MEASURES

Sometimes a brand becomes very unattractive to a customer segment. Reversing that impression might simply be too hard to do.

CHANGE HOW YOU MEASURE BRAND EQUITY

A focus on customer equity does not mean brand equity is unimportant Improving brand equity remains one of the most important tasks. And that means it should be reliably measured and tracked. The task is greatly complicated but yet not impossible by the realization that brand equity varies from customer to customer "Brand equity is the scheme of things".